San Diego's Tocagen Goes for $86 Million IPO

Tocagen, based in San Diego, announced that it plans to raise $86 million by way of an initial public offering (IPO).

Tocagen is a clinical-stage company focused on gene therapy for cancer. On February 23, it announced that the U.S. Food and Drug Administration (FDA) had granted Toca 511 and Toca FC Breakthrough Therapy Designation for the treatment of recurrent high grade glioma (HGG). Both Toca 511 and Toca FC are under evaluation in a Phase II/III clinical trial.

In addition to the Breaktkhrough Therapy Designation, the combination has received Fast Track designation for patients with recurrent HGG, and Orphan-Drug designation for the treatment of glioblastoma multiforme (GBM).

The company’s lead product is a combination of Toca 511, an investigational biologic, and Toca FC, an investigational small molecule. The combination is engineered to directly kill cancer cells and immune-suppressive myeloid cells. This activates the immune system against cancer.

Toca 511 is an injectable retroviral replicating vector. It encodes a prodrug activatory enzyme, yeast-derived cytosine deaminase (CD). Toca FC is an oral, extended-release version of 5-flurocytosine (5-FC). It is a prodrug inactive as an anticancer drug. The company claims that it works through absorption and transport through the bloodstream, across the blood-brain barrier, and into cancer cells.

“Unlike classical oncolytic viruses, our virus can first stealthily spread through a tumor before inducing killing via the prodrug,” said Harry Gruber, Tocagen’s president and chief executive officer, in an interview with Genetic Engineering & Biotechnology News in 2016.

The company intends to use the proceeds from the IPO to scale-up manufacturing and validation of Toca 511 and Toca FC. In addition, it plans to fund the Phase II part of the Phase II/III trial of the combo-therapy in recurrent HGG through top-line data review.

“We may also use a portion of the net proceeds from this offering to in-license, acquire, or invest in complementary businesses, technologies, products, or assets,” the company stated in a filing. “However, we have no current plans, commitments, or obligations to do so. We believe that the net proceeds from this offering and our existing cash, cash equivalents, and marketable securities, together with interest thereon, will be sufficient to fund our operations through at least the next 12 months.”

The company plans to trade on NASDAQ under the ticker symbol TOCA.

Bookrunners for the listing are Leerink Partners, Evercore ISI and Stifel. No pricing has been disclosed yet.

Data from the Phase II trial is expected in the first half of 2018. It completed enrollment in February.

The drug combination showed promise in Phase I trials. Of the 24 patients who received the higher Toca 511 doses and who met the inclusion data for the Phase II/III trial, three had complete responses and two had partial responses. Median overall survival for the 24 patients is 14.3 months.

Nick Paul Taylor, writing for FierceBiotech, says, “The question facing Tocagen is whether that will translate into improved overall survival when the experimental regimen is pitted against standard of care options including Merck ’s Temodal and Roche ’s Avastin. Tocagen is hoping Wall Street will provide the money it needs to start to answer the question.”

The company to-date has raised $95.9 million in nine equity funding rounds. The most recent was a venture round on August 10, 2015 for $28.8 million.